'Petro-Currency': Chavez Seeks Arab Support For Oil-Backed Currency To Challenge US Dollar

DOHA, Qatar — Venezuelan President Hugo Chavez tried Tuesday to court Arab support for another swipe at America as its economy stumbles: a proposal for a new, oil-backed currency to challenge the global prominence of the dollar.

The idea never reached the full agenda of a summit of leaders from South America and the Arab League _ and has little hope of gaining any momentum among the U.S. allies in the Middle East. But it managed to reflect broader sentiments at the gathering: That Western financial leadership has been deeply eroded by the economic meltdown.

Chavez set the tone moments after arriving in Qatar, proposing a "petro-currency" that would have the backing of oil-rich nations such as Venezuela and its Arab partners in OPEC. Chavez has tried before, with little success, to undercut the dollar's role as the world's leading commercial currency.

The dollar, however, is facing real pressures elsewhere.

China has struck deals _ most recently this week with Argentina _ to conduct trade in currencies other than the dollar, and Beijing's central bank governor has proposed creating a new "reserve currency" comprising a basket of global currencies controlled by the International Monetary Fund.

Iran has proposed replacing the dollar with the euro or other currencies to set worldwide oil prices, and other nations are swapping some foreign currency reserves in favor of the euro.

"Venezuela supports ... efforts to find an alternative reserve currency," Chavez told the summit.

Chavez plans stops in both Iran and China _ in addition to Japan _ after the one-day gathering, which focused heavily on trade issues but also touched on Arab worries about rival Iran's growing influence in Latin America.

Story continues below

"The global economic crisis erupted outside our regions, but nevertheless effect our economies," said a statement by business envoys from the two regions, who called for a "new international financial system" that includes greater influence from outside the West.

OPEC members _ including Venezuela and many Arab Leagues states _ have been hit hard by falling oil prices, which dipped below $48 a barrel on Tuesday.

Chavez predicted oil prices to rise and called $80 a barrel a "fair" level, according to a government statement. On Monday, Qatar's oil minister, Abdullah bin Hamad al-Attiyah, said his nation was "OK" with crude oil at $50 a barrel this year.

Brazilian President Luiz Inacio Lula da Silva told the gathering that the economic crisis is having "deep repercussions" on all economies, but it offers an opportunity "to correct the financial system and restore balance to global trade."

Delegates also encouraged expanding technology exchanges, including nuclear engineering. Argentina helped build one of Egypt's nuclear reactors and hopes to continue civil nuclear cooperation.

The summit's closing statement demanded "that all countries of the region, without exception" join the Nuclear Non-proliferation Treaty and open unclear facilities to U.N. inspection. It also appealed for nuclear weapons to be banned from the Middle East.

The message cited no specific nation, but many Arab leaders share Western worries that Iran could uses it nuclear program to develop atomic weapons, setting off a regional arms race. Iran says it only seeks reactors to produce electricity.

Meanwhile, Israel has two nuclear reactors _ ostensibly for research and scientific purposes _ but is widely believed to have developed nuclear weapons. Israel does not comment on its arms capabilities.

For Arab leaders, commercial ties are a direct way to counter Iran's increasing footholds in Latin America, particularly Tehran's connections to Chavez and Bolivian President Evo Morales. The estimated $21 billion trade includes oil and gas from the Middle East and steel and agricultural products from South America.

The final statement from the summit gave no mention of the Arab League's declaration Monday rejecting the International Criminal Court's charges against Sudanese President Omar al-Bashir for alleged war crimes in Darfur.

Chile's President, Michelle Bachelet, gave no details the South American refusal to join the Arab denunciation but suggested it reflected the need to acknowledge the rights of the ethnic African rebels fighting the Arab-led government in Khartoum.

"We, in South America, especially after suffering from several political dictatorships, understand very well that the struggle of people for their rights," she said.

___

Associated Press Writer Ian James in Caracas, Venezuela, contributed to this report.

Comments

[newworldman777]

Chavez is the living epitome of what happens when the evil pasts of European-dominated Western Hemisphere societies come back to haunt them. Chavez, who is part Native American, obviously is incensed by the harsh treatment that his people suffered for centuries at the hands of European-descended South American ruling classes. He undoubtedly hates any country in the Western Hemisphere that is controlled by European types of people, since they are foreign immigrants into this part of the world. I have listened to his speeches, and he sympathizes with any minority group -- particularly Native Americans -- living in the West. He is focusing his hatred on European-descended American politicians in particular and European-descended American society in general. Our past treatment of the American Indians -- the naked aggressive land theft, the ethnic cleansing, the genocide, the cultural destruction -- are all familiar to this man, since his own people suffered similar fates. He is now doing his own little part to get back at the Americas of the world. We shouldn't be surprised that we would all eventually pay a price for the sins of our fathers.

[ObjectiveRealist]

Some competition will be good for the dollar. It has reigned supreme too long, and those who loan it to Americans (the deceptively-named "Federal" Reserve) have become stupid and lazy.

[CaptD]

We are now in EEWW 1 (Energy Economic World War One) that will make it MUCH harder for Obama to change as many things as he indicated during his election speeches. Then in four years of desperate times globally, the Rep.'s will say that he did not keep his promises to the American people, the campaign will be funded by Big Oil $ (and it's investors here and abroad) which by then finally controls most of the industrial might of America!

The solution is to gain Energy Independence ASAP and spread that technology Globally; then Countries like Russia, Iran, Venezuela and others will not be able to have as much influence as they have!

After Food, Energy rules...

[fbr79]

Great comment, energy independece is the key.

[chaos4700]

It is also politically out of reach, unless the Obama administration grows a spine and pursues it and other aspects of his campaign promises more aggressively.

[RofWH]

And when the oil runs out another pseudo-currency bites the dust. Actually, it would be good for the world to use another currency and hyper-inflate that currency so we can relax for a while. It is just a convenience and any currency will do as long as there is enough of it to go around.
Anyone who pays any attention to Chavez is wasting their time. All those dollars flowing into Venezuela and still so much poverty. Some socialist he is!

[dididangerlove]

Wow - what great timing. Just when we decided to commit to alternative energy. This guy is a genius!

[chaos4700]

It is a starkly brilliant move. Right now, the only thing propping up the value of the dollar is American influence... and to some extent, American bombs. The proportion of one to the other is subject to debate. If Obama doesn't get his act together, the rest of the world might start to take a suggestion like this seriously. Not to dwell to far into the land of frivolous hypotheticals, but if McCain had somehow taken the White House we'd probably already see countries signing on to this petro-currency.

[fbr79]

Yeah, I think all members of OPEC should back their assets with oil, while we quickly move towards cleaner alternative energy sources. Brilliant!

[chaos4700]

Quickly, huh? As much as I'd actually like to see us move toward clean energy with alacrity... don't hold your breath.

[shafff]

When will this guy ever stop stirring the pot

[ena]

Looks like he's gone to pot (pun intended).

[FEARTHETRUTH]

As usual, Chavez is right on the money. This man is great. He speaks for the voiceless oppressed of this world. Obama is just a tool of the status quo. He is a big disappointment. He has no personal vision for the world. I am beginning to think that we may have been better of with McCain. So sad, so sad. A great waste of hope.

[vishix]

Oil-backed? Is this a joke?

[mendelcrosses]

What do u mean by ,is this a joke?

Do you know what MONEY really is?

the pieces of papers u see around arent money.

Oil is more of Money.

[RofWH]

You mean like gold? Ha,ha. Commodity-based currency never will work in this world of trade and more trade. Imagine: barrels of oil in Ft. Knox being moved around from the China room to the India room. Oh, wait! We can keep it all in account books, on (gasp!) paper. Or in computers. What a concept. Just like real money...

[vishix]

ok smart guy, what happens when oil starts running out? Won't the money you have in your pocket start sky rocketing? Who will benefit from this? Would a country like Venezuela benefit? Wouldn't they have control over the value of the dollar by controlling the supply? Wouldn't only a handful of oil countries have power over your money? Starting to see the big picture?